More Retrans Drama

It may sound odd from a coming from an editor, but as a consumer, I love not being tied to the ongoing drama of cable networks and retrans battles.  In the end, it only means one thing for consumers, and that’s higher prices.  Cable and broadcast networks alike are pressing cable providers for higher payments, which you can be sure will be passed straight onto your cable bill.

Now, I’m used to the retransmission fights cable channels and cable networks go through.  Pretty normal.  What’s new, and what ticks me off more, is the broadcast networks (FOX, ABC, NBC, and CBS) getting into the retransmission fee game.  As we learned this past December, CBS is believed to receive $0.40 per subscriber in retransmission fees.  That was the highest fee leveraged until recently.  Then, FOX started demanding $1.00 per subscriber from Time Warner.  While we don’t know exactly how much they settled on, it’s believed to be somewhere close to that.  That deal closed in the 11th hour of 2009, and FOX’s transmission went on uninterrupted.

New Year’s Day brought a temporary absence of the Scripps networks to Cablevision customers, thanks to retransmission fee disputes.  And while it sucked, I’m pretty sure the loss of Rachel Ray and Iron Chef didn’t drive people away from Cablevision in droves.  Three weeks later, the two companies had settled, and Cablevision viewers had Food Network and HGTV back.  It’s also worth noting that Time Warner’s service was never interrupted, even though Scripps was also locked in a retrans. fight with them.  That fight was settled on January 27th.  All of these deals are undisclosed and we can only guess at what the eventual agreements were.

The newest chapter in the 2010 retrans. saga is the cessation of WABC signal to Cablevision customers as of, well, about an hour and eighteen minutes ago.  At the start of Sunday, ABC pulled it’s programming from the network less than 24 hours before the Academy Awards are set to begin.  Not having cable at all in my house – we do all our watching online – the first I learned of this was Tuesday when I heard a commercial about it driving home from a lunch meeting.  It’s rumored that Disney and ABC are seeking $1 per subscriber, same as FOX did in December.

This unfortunately has all the same b.s. and drama that the Time Warner v. FOX battle had.  A major event is on the line – this time the Academy Awards – and the network is painting the cable provider as the bad guy for not giving their customers access to the show.  Which is all well and good, but Cablevision wasn’t the one who pulled the plug.  That was Bob Iger of Disney.  After hours price of Disney stock as dipped slightly while Cablevision holds steady.  Once again, I’m sure the cable provider will have no choice but to give in.  And once again, it pisses me off.

Why does it piss me off?  Because it reeks of desperation that networks feel as their traditional business model crumbles.  Broadcast networks traditionally subsist on the price they can command from advertisers.  Premium cable channels (such as HBO) make their money on subscriber fees and forgo advertising.  Typical cable channels (everything else) makes their money through a hybrid model of the two.  Thanks to a variety of factors such as fragmenting audiences, lack of quality programming, and ever higher demands, advertisers aren’t paying up the way they used to.  That doesn’t affect premium channels, and while it affects cable channels, their retrans negotiations usually play out in relative privacy.  Broadcast networks, however, are currently seeing their main revenue stream dry up.  So, they turn to retransmission fees as a way to make up what they’re loosing.

My problem with this is that advertiser fees were passed indirectly and very minutely to the public.  A company that can afford a national advertising campaign, such as Coke, sells enough product to distribute its advertising costs over a wide area.  The effect is that your bottle of soda may go up a couple pennies.  National cable providers can spread cost in a similar way.  Regional providers, such a Cablevision, not so much.  With a smaller pool to spread cost out over, they’ll have to hike rates higher than their competition.  And obviously, you can see the disadvantage to consumers.  It puts a regional company between a rock and a hard place – raise rates and make customers angry or pull programming and make customers angry.

If broadcast networks want to play this game, I think they should have to convert themselves to cable networks, and they should have to compete directly with other cable networks.  So Comcast, you might want to reconsider what you do with NBC.  I also hear that Les Moonves at CBS would be open to thinking about converting his network to cable if such a move became necessary.  To continue acting as if the consumer does not directly pay for your programming as you start directly charging their cable providers for access to your programming is deceitful.  I also think you need to realize that your business model is dying a slow painful death and come up with a nice list of alternatives.  One of those should be switching to cable.  Another should be experimenting with ways to monetize your programming online.  We’re all waiting to see what happens with Hulu once this Comcast/NBC case is worked out.  But in general, I think it unfair to call yourself a broadcast network when you’re cating ike a cable one.  Make up your mind and get on with it.  And stop demanding money.  Maybe if you actually had some quality programming, we’d think about paying more for you.

Oh, did we mention that ABC also has to renegotiate it’s contract with Time Warner sometime this year?  Looks like they’re using Cablevision to pave the way of whatever demands they hope to hand to Time Warner.

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